Open your Keychain and clear the "_AppleWi-FiInternetTetheringSSID_" key as well as any keys that match your iPhone's Wi-Fi network name then try again to conne

Open your Keychain and clear the "_AppleWi-FiInternetTetheringSSID_" key as well as any keys that match your iPhone's Wi-Fi network name then try again to connect using the "Instant Hotspot" feature (aka find your iPhone in the top of your Wi-Fi menu on Mac - it should be displayed separately from other networks). Apple tries to "improve" the personal hotspot experience and doesn't treat it like a normal Wi-Fi network - when that fails it fails completely instead of merely falling back to asking you for the network key.